#adp02This is the third screen in the series: Japanese Candlestick Trading: Stock Screens for 15 Candlestick Patterns

Signal Type: Reversal
Bias: Bearish
Inbound Trend: Uptrend
Reliability: 60%
Candlesticks in Pattern: 2

Pattern Definition
Found during a bullish trend, the Dark Cloud Cover candlestick pattern signals a top reversal. This occurs after an uptrend, or sometimes at the top of a congestion band.

The two stick patterns starts off during an uptrend, with large bodied white candlestick. The second day gaps up at the open, but quickly succumbs to selling pressure, and closes below the mid point of the previous days white candle (this is an area of support). The close should be at or near the lows of the day.

Supporting Criteria

• The further the black real body penetrates into the the prior days white body, the higher the odds for a top and reversal.
• Traders should wait for other confirmation if the dark cloud cover does not close below the mid point of the real white body
• Confirmation could be a black candlestick, a large gap down or a lower close on the next trading day.
• Look for divergences in the MACD indicator, and ADX that is rolling over, or has started to decrease.

Running The Screen

set{body_bottom,min(open,close)}
set{body_top,max(open,close)}
set{body_top1,max(open 1 day ago, close 1 day ago)}
set{body_bottom1,min(open 1 day ago, close 1 day ago)}
set{bs1, abs(body_top1 minus body_bottom1)}
set{bs1_half,bs1 / 2}
set{mid1, close 1 day ago minus bs1_half}
set{lshadowsize, body_bottom minus low}
set{tshadowsize, high minus body_top}
set{tshadowsize2, tshadowsize * 2}
set{body_size, abs(body_top minus body_bottom)}
set{body_targ, CMA(body_size,30) * 1.5}

shows stocks where MA(50) is rising
and MA(20) has been above MA(50) for 5 days
and body_size 1 day ago is greater than body_targ
and close 1 day ago is above open 1 day ago
and open is above high 1 day ago
and close is below open
and close is below mid1
and close is above open 1 day ago
add column body_size
add column CMA(body_size,30) * body_targ
add column mid1

Popularity: 7% [?]